Tag: hike

U.S. futures pointed to a slight recovery for the three major stock indexes at Tuesday’s open after the market rout a day earlier. The Dow Jones Industrial Average futures climbed 30 points, implying a gain of 100.02 for the index at Tuesday’s market open, as of 4:40 a.m. S&P 500 and Nasdaq futures also pointed to slight gains for the two other major stock indexes. Stocks had fallen sharply on Monday ahead of the Federal Reserve Bank’s anticipated rate hike this week. The Cboe Volatility Index —

U.S. futures pointed to a slight recovery for the three major stock indexes at Tuesday’s open after the market rout a day earlier.

The Dow Jones Industrial Average futures climbed 30 points, implying a gain of 100.02 for the index at Tuesday’s market open, as of 4:40 a.m. ET Tuesday. S&P 500 and Nasdaq futures also pointed to slight gains for the two other major stock indexes.

The S&P 500 fell 2 percent to 2,545.94 — its lowest close for 2018. The Dow Jones Industrial Average also plunged 507.53 points to close at 23,592.98, ratcheting up a combined two-day loss of more than 1,000 points.

The Nasdaq Composite saw declines, falling 2.27 percent to end the trading day at 6,753.73.

The Cboe Volatility Index — one of Wall Street’s gauges of market fear — rose above 25 and volume for the stock market was heavier than usual.

The Fed is widely expected to hike its benchmark overnight lending rate for a fourth and final time of 2018 when it concludes a two-day policy meeting on Wednesday. While fears of rising interest rates have spooked markets throughout the year, such concerns have heightened over the past month as inflation and growth expectations recede.

U.S. President Donald Trump took aim at the Fed again on Monday, saying in a tweet that “it is incredible” that the central bank was “even considering yet another interest rate hike” amid the “outside world blowing up around us.”

Trump has openly criticized the Fed, as well as Fed Chairman Jerome Powell, several times in 2018.

The Federal Reserve could cause “panic” on Wall Street if it reneges on its widely anticipated December interest rate hike, CNBC’s Jim Cramer said Friday. “Because he’s promised a rate hike, [Fed Chair Jerome Powell] risks stirring a wave of fear if he doesn’t tighten,” Cramer said as stocks fell on weaker-than-expected jobs results and trade worries. “It would be wrong to tighten, but if he doesn’t give us a full quarter-point rate hike, it will cause a panic,” the “Mad Money” host said. In fai

The Federal Reserve could cause “panic” on Wall Street if it reneges on its widely anticipated December interest rate hike, CNBC’s Jim Cramer said Friday.

“Because he’s promised a rate hike, [Fed Chair Jerome Powell] risks stirring a wave of fear if he doesn’t tighten,” Cramer said as stocks fell on weaker-than-expected jobs results and trade worries. “Investors will start presuming that something must be wrong, very wrong, that things are worse than they thought.”

But even if the central bank decides that it’s worth taking a more data-dependent approach after the weaker jobs data, its chief has put himself in a difficult position with his recent statements, Cramer said.

“No one wants the Fed to tighten going into a slowdown, especially when we might be in a tariff war around the globe. People want the Fed to be flexible. Thanks to his previous comments, though, Powell’s in a lose-lose situation,” he said, pointing to Powell’s remarksthat interest rates were “just below” where they should be.

“It would be wrong to tighten, but if he doesn’t give us a full quarter-point rate hike, it will cause a panic,” the “Mad Money” host said. “I hate to say it, Mr. Powell, but, here goes: I told you so.”

“The fact is, though, the economy’s slowing and the stock market sure shows it. […] That’s why it’s so skittish,” he explained. The major averages have endured drastic intraday swings this week as investors fretted about a host of economic pressures, including but not limited to the U.S.-China trade dispute.

Earlier this week, a “yield curve inversion” between the three- and the five-year Treasury yields also set off warning bells on Wall Street and spurred a sharp sell-off in stocks.

“Maybe a creative Fed chief could square that circle by holding off on a rate hike, but maybe selling some of the long-term bonds that they’ve been sitting on since the financial crisis — a different kind of tightening that would fix the inverted yield curve situation,” Cramer said. “Although, … ideally, you don’t want any tightening and the Fed would simply sit tight.”

All things considered — including the S&P 500 index turning negative for the year — investors should prepare for more market swings in the coming weeks, the “Mad Money” host warned.

“I think we’re going to have to slog through these volatility sessions for a bit, as there are all sorts of difficult crosscurrents here” including U.S.-China trade relations and the weakness in shares of stock market bellwether Apple, he said.

“And, of course, an errant Federal Reserve that’s backed itself into a corner when it comes to the next rate hike,” he added. “Get used to these crosscurrents, because this is the new normal, at least for now.”

Gold edged higher on Thursday as growing risk aversion weighed on the dollar, while palladium held ground at a premium to the bullion. Spot gold was up 0.2 percent at $1,239.86 per ounce, as of 0429 GMT, while U.S. gold futures were 0.2 percent higher at $1,244.9 per ounce. “Markets are trying to consolidate, trying to push up higher for now,” said Benjamin Lu, a commodities analyst with Phillip Futures. The dollar declined against the safe-haven yen as a spike in risk aversion pressured equitie

Gold edged higher on Thursday as growing risk aversion weighed on the dollar, while palladium held ground at a premium to the bullion.

Spot gold was up 0.2 percent at $1,239.86 per ounce, as of 0429 GMT, while U.S. gold futures were 0.2 percent higher at $1,244.9 per ounce.

“Markets are trying to consolidate, trying to push up higher for now,” said Benjamin Lu, a commodities analyst with Phillip Futures.

A balance between a host of factors such as a rate hike by the U.S. Federal Reserve in December, uncertainty about trade tensions between Washington and Beijing, and a flattening yield curve has helped create a premium for the bullion, Lu added.

Fed policymakers will gather at a Dec. 18-19 meeting, at which the central bank is widely expected to raise interest rates.

“Although a rate hike is already priced in, markets will be closely watching the meeting for clues on rate hike timings in 2019,” said Lukman Otunuga, a research analyst at FXTM, adding that: “if the meeting echoes a similar message to (Chairman Jerome) Powell’s dovish shift, gold has the potential to shine into 2019.”

The dollar declined against the safe-haven yen as a spike in risk aversion pressured equities and U.S. Treasury yields. The spread between the two-year and five-year Treasury yields inverted this week and the two-year/10-year spread was at its flattest in more than a decade amid a sharp fall in long-term rates.

“An yield curve inversion indicates higher borrowing cost in short term, so for safe-haven assets in the longer run it’s going to be very positive,” Phillip Futures’ Lu said.

Spot gold may test a resistance at $1,245 per ounce, a break above which could lead to a gain into a range of $1,253-$1,258, according to Reuters technical analyst Wang Tao.

Meanwhile, palladium continued to be more valuable than gold after outshining the yellow metal for the first time since 2002 on Wednesday, with prices soaring by around 50 percent in less than four months to record levels.

Spot palladium rose 0.1 percent to $1,245.00 per ounce, hovering near its record high hit in the previous session.

The market now awaits Friday’s U.S. non-farm payrolls data for November, which is expected to show unemployment remains at 3.7 percent.

“Investors are seen adopting a cautious stance ahead of the U.S. jobs report which could offer insight over the health of the U.S. labour force,” said FXTM’s Otunuga.

Amongst other metals, silver fell 0.7 percent to $14.41 per ounce, while platinum extended losses into a third session, declining 0.7 percent to $795.00 per ounce.

The French government is reportedly ready to suspend a controversial rise in fuel tax that has caused widespread protests throughout the country and dramatic scenes of violence and civil unrest. French media reported Tuesday morning that Prime Minister Edouard Philippe is to announce a moratorium on the planned fuel tax hike that has caused public anger in the country. The news was carried by French newspapers Le Figaro, Le Monde and Liberation, as well as news agencies Reuters and AFP. Leaders

The French government is reportedly ready to suspend a controversial rise in fuel tax that has caused widespread protests throughout the country and dramatic scenes of violence and civil unrest.

French media reported Tuesday morning that Prime Minister Edouard Philippe is to announce a moratorium on the planned fuel tax hike that has caused public anger in the country.

The news was carried by French newspapers Le Figaro, Le Monde and Liberation, as well as news agencies Reuters and AFP. Both the prime minister’s and president’s office declined to comment on the reports when contacted by CNBC.

Leaders from the “Yellow Vest” movement, so-called because of the high visibility jackets worn by demonstrators, have reportedly refused to meet Philippe on Tuesday for talks on how to diffuse opposition to planned fuel tax increases.

Initial protests in previous weeks have now morphed into wider anger at a perceived drop in living standards, price rises and anti-government sentiment, particularly leveled at French President Emmanuel Macron who is seen by many as representative of the elite and wealthy.

Protests have turned increasingly dramatic and often violent. Saturday’s protests in Paris were the worst to date with stores looted, cars torched and buildings and monuments damaged by some protesters.

The riots have been described as the “worst in a generation” and “pre-revolutionary.” Three people have reportedly died as a result of the unrest, hundreds have been injured and hundreds arrested.

The greenback has been under pressure this week on growing expectations that the Federal Reserve would slow down its pace of monetary tightening, a view reinforced by comments on Wednesday from Chairman Jerome Powell. “If tariffs on Chinese imports stay at 10 percent, the dollar is likely to weaken in a risk-on move,” he said. Overnight, minutes from the Fed’s Nov. 7-8 meeting indicated that another interest rate hike is warranted. However, some analysts think that the market may be underestimat

The dollar trod water in nervous trade on Friday ahead of a meeting of U.S. and Chinese leaders that might, or might not, lead to a truce in the Sino-U.S. trade war, which would boost emerging market currencies at the expense of safe havens.

The greenback has been under pressure this week on growing expectations that the Federal Reserve would slow down its pace of monetary tightening, a view reinforced by comments on Wednesday from Chairman Jerome Powell.

Despite the dovish comments from Fed officials, there was no large scale dollar sell-off, partly due to the strength of the U.S. economy, weakening growth elsewhere, and dollar’s own status as a safe haven amid the Sino-U.S. trade war.

It held steady Asian trade, with an index measuring its value versus six peers up marginally at 96.72.

The focus is now on a planned meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires between Nov. 30-Dec.1.

Trump kept markets nervous by sending mixed signals on Thursday about the prospects for a trade deal with Xi.

“If we see a truce, the Aussie and kiwi dollar will perform exceptionally well. We see a lot of upside in crosses such as Aussie/yen which would benefit from a risk on move,” said Nick Twidale, chief operation officer, Rakuten Securities.

“If tariffs on Chinese imports stay at 10 percent, the dollar is likely to weaken in a risk-on move,” he said.

Trump has said he plans to significantly hike the existing 10 percent tariffs on Chinese imports by January next year, which would sharply escalate the trade war between the economic heavyweights.

China’s economy is already under pressure, with a survey earlier on Friday showing its vast manufacturing sector growth stalled for the first time in over two years in November as new orders shrank.

Apart from U.S.-Sino trade talks, the markets would also be focusing on whether OPEC and Russia agree on oil production cuts next week.

A meaningful rebound in crude prices can be beneficial for commodity currencies such as the Canadian dollar and Norwegian krone according to Michael McCarthy, chief markets strategist at CMC Markets.

Dollar investors were also carefully watching for any changes in U.S. monetary policy.

Overnight, minutes from the Fed’s Nov. 7-8 meeting indicated that another interest rate hike is warranted. But Fed officials also kept the debate open on when the U.S. central bank might pause its monetary tightening and how it would relay those plans to the public.

The Fed is widely expected to raise interest rates by 25 basis points in December, which would be the fourth hike for the year.

For 2019, the market is now pricing only one rate hike, according to the CME Group’s FedWatch Tool, below Fed’s projection of three increases during the year.

On Wednesday, Powell said the Fed’s policy rate is now “just below” estimates of a neutral rate, which investors interpreted as a signal the Fed’s three-year tightening cycle is drawing to a close.

However, some analysts think that the market may be underestimating the number of times the Fed can hike rates next year.

“We believe that Powell has not turned dovish but simply toning down his hawkish tilt. We expect a Fed hike in December and the US economy to keep performing and support another four hikes in 2019,” said Philip Wee, currency strategist at DBS in a note.

The dollar weakened 0.07 percent versus the yen, which changed hands at 113.41 at 0350 GMT. Analysts expect the dollar/yen to remain in an uptrend due to the diverging monetary policies of the Fed and the Bank of Japan.

The euro was steady at $1.1390, having risen in the last two sessions as the dollar wobbled on Powell’s comments.

Elsewhere, sterling traded at $1.2779, losing 0.1 percent versus the greenback. Traders remain bearish on the pound betting that British Prime Minister Theresa May will fail to win approval for her Brexit deal in a fractious parliament.

“No news is bad news for sterling. There’s been no meaningful progress in Brexit negotiations and investors are growing impatient,” said Kathy Lien, managing director of currency strategy at BK Asset Management in a note.

The Australian dollar lost 0.08 percent to $0.7315 on the weak Chinese PMI data.

Federal Reserve officials teed up a December rate hike at their most recent meeting, but not without misgivings about how trade tensions and corporate debt could impact growth. However, the meeting summary also noted some concern about the “timing” of rate hikes. Current projections indicate that in addition to the December move, the FOMC is likely to approve three more hikes in 2019. Moreover, officials indicated that further post-meeting statements might be altered to remove the reference to “

Federal Reserve officials teed up a December rate hike at their most recent meeting, but not without misgivings about how trade tensions and corporate debt could impact growth.

Minutes released Thursday from the Nov. 7-8 meeting of the Federal Open Market Committee, which sets interest rates, pointed toward the strong likelihood of another quarter-point adjustment in the central bank’s benchmark rate target next month.

That’s in line with market thinking despite the recent volatility.

“Consistent with their judgment that a gradual approach to policy normalization remained appropriate, almost all participants expressed the view that another increase in the target range for the federal funds rate was likely to be warranted fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations,” the minutes stated.

However, the meeting summary also noted some concern about the “timing” of rate hikes. Current projections indicate that in addition to the December move, the FOMC is likely to approve three more hikes in 2019.

Moreover, officials indicated that further post-meeting statements might be altered to remove the reference to “further gradual increases” in the target range as long as current conditions persist. The reason for doing that is to stress that the committee is not on a preset course with rates and instead will be evaluating future decisions based on incoming economic data.

“Such a change would help to convey the Committee’s flexible approach in responding to changing economic circumstances,” the minutes said.

This Fed has signaled it will be a different Fed, says El-Erian 1 Hour Ago | 04:03The Federal Reserve next month will be forced to hike interest rates for a fourth time in 2018 or risk being seen as politically coerced, economist Mohamed El-Erian told CNBC on Tuesday. “I think the Fed right now is a much bigger problem than China,” Trump told The Wall Street Journal on Monday. El-Erian said the Fed rate decision due on Dec. 19 will be “a real test as to whether the power of the Fed is indeed a d

This Fed has signaled it will be a different Fed, says El-Erian 1 Hour Ago | 04:03

The Federal Reserve next month will be forced to hike interest rates for a fourth time in 2018 or risk being seen as politically coerced, economist Mohamed El-Erian told CNBC on Tuesday.

“It is very hard for the Fed right now to go back to three hikes,” the chief economic advisor at Allianz said on “Squawk Box.” “If they don’t [hike], the market is going to say the economy is much weaker than we anticipated and/or the Fed is much more open to political intervention.”

President Donald Trump has repeatedly expressed frustration with the Fed’s moves to raise rates, arguing the central bank could disrupt the U.S. economic recovery. “I think the Fed right now is a much bigger problem than China,” Trump told The Wall Street Journal on Monday.

Fed Chairman Jerome Powell said early last month the cost of borrowing money was a long way from so-called neutral, sparking concerns about a more aggressive Fed tightening that led to October being the worst month for the S&P 500 since September 2011. The market rout spilled into November, with the S&P 500 down 1.41 percent for the month as of Monday’s close.

The central bank has raised interest rates three times this year and the market expects another one in December. After its most recent hike, in September, the Fed projected three rate increases in 2019.

El-Erian said the Fed rate decision due on Dec. 19 will be “a real test as to whether the power of the Fed is indeed a different Fed or whether at the first sign of market volatility they flinch.”

“The Fed has put itself in a bit of a box and will have to go through with four hikes,” he added.

However, in a speech Tuesday, Fed Vice Chairman Richard Clarida expressed a cautious view on interest rates, saying they are “much closer” to neutral.

Shortly after those comments, El-Erian said the Fed could change course on rates next year that is much more favorable to the market.

In a July interview on CNBC, El-Erian said the Fed would likely attempt to ignore the president’s criticism. He reiterated those sentiments Tuesday, but recognized the power of perception may be too great.

China ‘desperately’ needs to delay the US tariff hike: SEB11 Hours AgoU.S. President Donald Trump said he expects to go ahead with increasing tariffs on Chinese goods. Thomas Thygesen of SEB says it may be difficult for the president to “back out” of the position he has taken.

U.S. President Donald Trump said he expects to go ahead with increasing tariffs on Chinese goods. Thomas Thygesen of SEB says it may be difficult for the president to “back out” of the position he has taken.

The U.S. Federal Reserve says that the “impetus” to economic growth will be “wearing off … in the next year or so,” while continuing to insist on the need for tightening credit conditions. That sounds like the Fed wants to make sure the economy goes into an intractable recession. Media reports are amplifying the confusion with stories that the Fed is worrying about the impact of tight labor markets on inflation in a slowing economy. American residential investments virtually stagnated at an annu

The U.S. Federal Reserve says that the “impetus” to economic growth will be “wearing off … in the next year or so,” while continuing to insist on the need for tightening credit conditions.

That sounds like the Fed wants to make sure the economy goes into an intractable recession.

Media reports are amplifying the confusion with stories that the Fed is worrying about the impact of tight labor markets on inflation in a slowing economy.

Looking at that mishmash, President Donald Trump might be forgiven for turning to his real estate friends to see growth implications of rising credit costs and the collapsing housing demand.

American residential investments virtually stagnated at an annual rate of 0.6 percent in the first three quarters of this year, after a sharp slowdown to a 3.4 percent growth in 2017.

That’s a serious jolt to private consumption, because a slowdown of housing demand always triggers a decline in sales of consumer durable goods, popularly known as the “big-ticket items,” such as furniture, home furnishings, kitchen appliances and cars.

Consumer durables account for nearly 40 percent of all goods purchases in the U.S. economy, and their annual growth rate in the first three quarters of this year was a meager 1.4 percent.

Phil Orlando, Federated Investors chief equity market strategist, has moderated his optimism this year and next, reflecting a range of headwinds buffeting the stock market. In particular, one market risk is at the forefront of his mind. “But the Fed’s dot plots have them continuing to hike, bringing the funds rate up to about 3.5 percent in the middle of 2020,” added Orlando. The Fed’s dot plot release in September suggests a fed funds rate of 3.1 percent for 2019, meaning as many as three rate

Even some of the biggest bulls on Wall Street are pulling in the reigns.

Phil Orlando, Federated Investors chief equity market strategist, has moderated his optimism this year and next, reflecting a range of headwinds buffeting the stock market.

He anticipates 2900 on the S&P 500 by the end of 2018, half the advance he had previously anticipated, though still an 8 percent gain. Orlando has also revised his 3,500 target on the S&P 500 for 2019 to 3,300.

In particular, one market risk is at the forefront of his mind.

“The Fed is right at the top of our list,” Orlando told CNBC’s “Futures Now” on Thursday. “We’re fine with the quarter-point hike at the December FOMC meeting, we’re fine with another two-quarter-point hike, say, in the first half of next year, but, at a 3 percent funds rate, we think we should be done.”

Orlando says the likelihood of slower economic growth both in the U.S. and abroad warrants a pause from the Federal Reserve at the 3 percent mark in the second half of 2019, and early 2020.

“But the Fed’s dot plots have them continuing to hike, bringing the funds rate up to about 3.5 percent in the middle of 2020,” added Orlando.

The Fed’s dot plot release in September suggests a fed funds rate of 3.1 percent for 2019, meaning as many as three rate hikes next year.

“In our view that’s too much,” Orlando said. “The risk for the market is that the Fed over-tightens, we invert the yield curve, and we actually create the recessionary environment perhaps in 2021 that the market and the Fed are trying to avoid.”

The Fed will publish a new dot plot forecast at its December meeting. Markets are pricing in another 25-basis point hike at that meeting, according to CME Group fed funds futures.

The Fed isn’t the only risk on Orlando’s radar. He said other issues, including uncertainty over a U.S.-China trade resolution, and the threat of a strong U.S. dollar impacting corporate earnings, continue to “dog the market” and push it lower.